'  ^ 


L6th  Congress,  )  HOUSE 
3d  Session.  \ 


0F  ^EPRESENK^TIVES.  i  Report 

\  No.  322. 


TN  ^EROCEANIO  SHIP  RAILWAY. 

For  views  ui  luo  minority  of  committee,  see  House  Mis.  Doc.  No.  13,  third  session 

Forty-sixth  Congress. ) 


February  22,  1881. — Ordered  to  he  printed. 
January  5,  1885. — Ordered  to  be  reprinted. 


[r.  King,  from  the  Committee  on  Interoceauic  Ship  Canal,  submitted 

the  following 

REPORT: 

[To  accompany  bill  H.  R.  3662.] 

Shortly  after  its  appointment  the  committee  organized  and  proceeded 
[to  hear  the  testimony  of  many  persons  interested  in  the  various  routes 
[across  the  American  Isthmus.  A  number  of  surveys,  both  at  Nicaragua 
and  Panama,  had  in  years  past  been  made,  under  the  supervision  of  well- 
Iknown  Government  engineers,  some  of  whom  appeared  before  the  com- 
[mittee  and  explained  matters  connected  with  their  surveys,  exhibiting 
[charts  and  plans  of  the  various  routes,  and  calling  attention  to  the  ad¬ 
vantages  which  they  respectively  presented. 

Your  committee  does  not  consider  it  necessary  to  dwell  at  any  length 
[upon  this  testimony  of  a  general  character  taken  before  it,  inasmuch  as 
the  points  of  interest  which  it  contains  will  all  appear  from  a  perusal 
[of  the  same,  it  having  been  printed  for  the  use  of  the  House. 

The  only  value  which  this  testimony  can  have  will  depend  upon  its 
[relation  to  the  practical  solution  of  the  problem  of  Isthmian  transit. 
For  more  than  three  centuries  the  question  of  the  removal  of  the  Isth¬ 
mian  barrier  has  been  discussed  by  the  civilized  world,  and  its  impor¬ 
tance  has  increased  with  the  growth  of  commerce,  until  in  our  day  its 
I  solution  has  been  determined  upon  as  a  matter  of  absolute  necessity. 
Although  a  transit  way  across  the  Isthmus  would  be  of  great  value  to 
[all  the  maritime  nations  of  the  earth,  the  commerce  of  no  nation  would 
be  as  beneficially  affected  by  it  as  that  of  the  United  States,  provided 
[such  transit  way  be  located  at  the  proper  point  upon  the  Isthmus.  The 
total  length  of  the  Isthmus  is  about  1,500  miles,  and  there  are  a  num¬ 
ber  of  points  where  the  location  of  a  transit  way  has  been  deemed  prac¬ 
ticable.  The  most  prominent  of  these  are  Tehuantepec,  Nicaragua,  and 
Panama. 

Three  propositions  of  a  practical  character  were  submitted  to  your 
committee.  The  first  was  that  of  M.  Be  Lesseps,  who  proposed  to  con¬ 
struct  a  tide-level  canal  at  Panama.  The  second  was  that  of  a  number 
of  gentlemen  who  proposed  to  construct  a  canal  with  locks  at  Nicaragua, 
and  the  third  was  that  of  Mr.  James  B.  Eads,  who  proposed  to  construct 
a  ship  railway  across  the  Isthmus  of  Tehuantepec.  Your  committee 
could  not  consider  with  any  favor  the  first  of  these  propositions.  The 
company  proposing  to  do  the  work  was  one  organized  in  France  under 
French  law,  and  one  of  the  inducements  held  out  to  subscribers  in 
France  by  M.  He  Lesseps  was  that  all  questions  arising,  wherein  the 


>  w 


2  INTEROCEANIC  SHIP  RAILWAY. 

K'S?  A  vW 

\  >  r  \ 

rights  of  parties  interested  were  to  be  adjudicated,  would  be  determined 
before  French  courts.  Being  finally  convinced  that  it  was  to  the  interests 
of  the  United  States  Government  to  control  any  transit  constructed 
upon  the  Isthmus,  and  that  we  could  not  consent  as  a  nation  to  the  con¬ 
trol  of  the  same  by  foreign  capital,  protected  as  it  must  be  by  foreign 
power,  your  committee  were  unwilling  to  give  any  countenance  to  this 
French  project.  It  is  idle  to  attempt  to  disconnect  an  investment  by 
foreign  capital,  under  a  foreign  charter,  from  an  assertion  of  foreign 
power.  If  the  Government  of  the  United  States  were  to  permit  the  in¬ 
vestment  of  European  capital  in  a  canal  at  Panama,  it  would  be  the  right 
and  duty  of  that  European  power  to  protect  its  citizens  in  the  enjoy¬ 
ment  of  all  rights  growing  out  of  their  investment.  But  it  may  be  said : 
“Allow  the  company  to  construct  the  work,  and  if  any  foreign  power 
shall  afterwards  interfere,  it  will  then  be  time  enough  for  the  Govern¬ 
ment  of  the  United  States  to  resist  such  interference.”  Your  committee 
are  unwilling  to  recommend  the  adoption  of  a  course  which  would  in¬ 
evitably  result  in  bringing  on  a  war  between  France  and  this  country, 
when  by  the  present  exercise  of  wisdom  the  complications  leading  to 
war  can  be  avoided.  A  proper  discouragement  by  our  Government  of 
the  French  project  and  a  refusal  to  countenance  or  permit  its  construc¬ 
tion  would  render  it  impossible  for  any  of  those  questions  to  arise  which 
would  bring  the  two  nations  in  conflict. 

Leaving  entirely  out  of  view,  however,  the  question  of  the  policy  of 
our  Government  of  control  over  an  Isthmus  highway,  there  are  other 
grounds  upon  which  the  committee  could  not  give  its  assent  to  the  Pa¬ 
nama  project.  The  Panama  route  offers  to  our  commerce  scarcely  any 
advantage  over  the  commerce  of  other  nations.  A  vessel  leaving  the 
mouth  of  the  Mississippi  River  bound  for  California  or  the  Orient  would 
be  required  to  cross  the  Gulf  of  Mexico,  and,  passing  through  the  Yu¬ 
catan  Channel,  sail  hundreds  of  miles  along  the  coast  of  the  Caribbean 
Sea,  and  after  crossing  at  Panama  traverse  again  for  hundreds  of  miles 
a  northwardly  course  on  the  Pacific  side  before  she  would  reach  a  point 
on  the  Pacific  opposite  to  that  from  which  she  set  out.  If  European 
commerce  is  alone  to  be  considered,  Panama  is  the  route;  but  it  is  not 
the  route  for  American  commerce.  Another  objection  to  the  construc¬ 
tion  of  such  a  canal  at  Panama  lies  in  the  enormous  cost  of  the  work. 
Without  stopping  to  give  in  detail  the  various  estimates  submitted, 
your  committee  reports  that  such  a  work  would  probably  not  cost  less 
than  two  hundred  millions  of  dollars,  and  might  cost  a  great  deal  more; 
that  it  would  hardly  be  completed  in  less  than  twenty  years,  and  that 
the  cost  of  maintenance  when  completed  cannot  be  safely  estimated. 

The  proposition  to  construct  a  canal  at  Nicaragua,  although  not  sub¬ 
ject  to  the  same  objections  as  those  in  the  case  of  the  tide-level  canal  at 
Panama,  is  nevertheless  by  no  means  free  from  objection.  The  Nicaragua 
route  is  undoubtedly  the  best  one  if  a  canal  is  to  be  constructed ;  but  Te¬ 
huantepec  possesses  advantages  in  point  of  location  which  can  be  claimed 
for  no  other  route.  This  brings  us  at  once  to  the  consideration  of  the 
proposition  of  Mr.  James  B.  Eads  to  construct  a  ship  railway  at  Tehuan¬ 
tepec.  In  considering  this  proposition  the  question  first  presents  itself, 
is  a  ship  railway  practicable  f  The  evidence  before  the  committee  upon 
this  point  is  overwhelmingly  in  the  affirmative.  Mr.  Eads  submitted  to 
the  committee  his  plans  in  detail,  so  fully  explaining  all  points  involved 
and  answering  all  objections  presented  as  to  convince  your  committee 
that  the  work  proposed  will  accomplish  all  he  claims  for  it.  The  trans¬ 
portation  of  vessels  by  rail  is  by  no  means  an  untried  experiment,  but 
has  been  demonstrated  as  feasible  by  actual  experience.  No  railway, 


interoceanic  ship  railway. 


-it  is  true  lias  ever  heretofore  been  constructed  for  the  transportation 
°  of  ocean  vessels  of  the  largest  class,  but  vessels  of  smaller  tonnage  have 
<  been  in  the  past,  and  ^e,now  being,  safely 


/both  PtwUmntry  and  abroad.  Forty  years  ago  canal-boats  were 
transported  by  rail  on  what  was  known  as  the  Portage  Railioad,  m  the 
State  of  Pennsylvania,  which  road  extended  from  Johnstown  to  Hof  1- 
davsbur°‘  and  was  used  in  connection  with  the  Pennsylvania  filial. 
Within a’few  miles  of  Washington,  boats,  with  their  cargoes  are  now 
being  transported  by  rail  from  the  Potomac  River  to  the  canal,  30  feet 
above  •  and,  in  Prussia,  river  and  lake  steamers,  with  their  cargoes,  ai  e 
transported  in  a  similar  manner  over  long  distances.  There  is  a  vast 
interval  between  the  portage  of  an  Indian  canoe  and  the  transportation 
of  great  ships  by  an  interoceanic  railway,  but  it  is  not  greater  than  sci¬ 
ence  has  bridged  in  other  departments  of  human  effort.  Your  commit¬ 
tee  will  not,  however,  go  into  a  discussion  ot  the  various  questions  o 
engineering  involved  in  the  matter  of  the  practicability  of  a  ship  rail- 

W8riie  evidence  before  the  committee  clearly  settles  that  matter.  Some 
of  the  most  able  and  prominent  engineers  in  the  world  have  declared  in 
letters,  which  have  been  submitted  to  the  committee,  that  the  pioject 
of  a  ship  railway  is  in  every  sense  practicable.  Among  those  who  have 
thus  testified  are  General  Q.  A.  Gill  more,  of  tne  lilted  States 
Corns*  Hon.  E.  J.  Peed,  late  chief  constructor  of  the  British  Navy, 
Edward  Hartt,  United  States  naval  constructor 5  Commander  Farquhar, 

U  S.  N.;  Henry  Fladd,  C.  E. ;  C.  Shader  Smith,  C.  E.;  Mr.  O.  Chanute, 
superintendent  of  the  Erie  Railway ;  General  G.  T.  Beauregard  ;  Maj. 
Charles  R.  Suter,  United  States  Engineer  Corps ;  H.  T.  Whitcomb, 
United  States  Engineer  Corps,  and  others  ot  equal  prominence  and 
ability  Not  only  is  there  an  abundance  of  evidence  upon  the  question 
of  the  practicability  of  a  ship  railway,  but  it  is  a  noticeable  fact  that  no 
.  engineer  has  appeared  before  the  committee  denying  its  practicability. 

•  0  Your  committee  believe,  from  the  evidence  before  them,  the  following 
W  facts  *  1st,  that  a  ship  railway  can  be  constructed  at  less  than  one-nail 
^  the  cost  of  a  canal  with  locks;  2d,  that  such  railway  can  be  completed 
in  five  years,  while  it  would  take  ten  years  longer  to  construct  a  canal 
•W  at  Nicaragua,  and  twenty  years  or  more  to  construct  the  tide-level  canal 
v;:  at  Panama;  3d,  that  vessels  of  largest  tonnage,  with  their  cargoes,  can 
-O  he  safely  transported  upon  the  railway  at  a  fair  rate  ot  speed;  t  ,  a 
the  cost  of  maintenance  of  the  railway,  when  completed,  will  not  exceed 
V  that  of  a  canal  with  locks,  and  will  be  less  than  that  ot  a  tide-level  c^na  5 
-  and,  5th,  that  the  railway,  when  completed,  will  meet  the  wants,  not  only 
of  present,  but  future  commerce,  inasmuch  as  an  increase  in  the  size  ot 
^  ships  will  not  require  any  substantial  alteration  in  its  road  or  its  bed, 
but  will  simply  affect  the  rolling-stock.  In  this  respect  the  railway  has 

S  a  great  advantage  over  a  canal  with  locks. 

Having  considered  and  settled  the  question  of  the  practicability  ot  a 
J  ship  railway,  and  having  stated  the  various  ad\  antages  possessed  by 
L  the  same,  the  next  matter  to  consider  is  the  point  upon  the  Isthmus 
where  it  is  proposed  that  such  railway  shall  be  located. 

Mr.  Eads  has  selected  the  Isthmus  of  Tehuantepec,  and  your  com¬ 
mittee  unhesitatingly  finds  and  reports  that,  of  all  the  routes  across  the 
Isthmus,  Tehauntepec  is  essentially  the  American  route.  A  glance  at 
the  map  will  at  once  demonstrate  the  correctness  of  this  assertion.  It  a 
vessel  leaving  the  mouth  of  the  Mississippi  River,  bound  for  California 
or  the  Orient,  cross  the  Isthmus  at  Tehuantepec,  her  voyage  will  be 
1,250  miles  shorter  in  distance  than  if  she  crossed  at  Nicaragua,  and 


Q 


4 


INTEROCEANIC  SHIP  RAILWAY. 


2,200  miles  shorter  than  if  she  crossed  at  Panama.  If  a  vessel  leav¬ 
ing  New  York,  bound  for  the  same  destination,  cross  the  Isthmus  of 
Tehuantepec,  her  voyage  will  be  750  miles  shorter  than  if  she  went  by 
Nicaragua,  and  1,250  miles  shorter  than  if  she  went  by  Panama.  Inas¬ 
much  as  this  large  saving  of  distance  chiefly  affects  only  the  commerce 
of  this  country  and  that  of  Mexico,  and  not  the  commerce  of  Europe,  it 
must  be  at  once  apparent  that  the  location  of  a  transit  way  at  Tehuan¬ 
tepec  is  of  vital  importance  to  the  commercial  interests  of  the  United 
States. 

The  saving  of  distance  is  synonymous  with  cheap  transportation. 
Both  at  Panama  and  Nicaragua,  at  various  periods  throughout  the  year, 
calms  prevail  to  an  extent  which  would  greatly  decrease  the  value  of 
either  of  the  routes  for  sailing  vessels.  Such,  however,  is  not  the  case 
at  Tehuantepec,  as  favorable  winds  always  prevail  there,  thus  affording 
a  guarantee  of  no  serious  detention  to  sailing  vessels  seeking  a  passage 
by  that  route. 

Mr.  Eads  has  secured  from  the  Mexican  Government  a  most  generous 
concession  for  his  ship  railway.  Realizing  the  importance  of  such  a 
work  to  her  own  commerce  and  that  of  the  United  States,  Mexico  has 
shown  a  liberality  truly  to  be  commended.  She  has  given  to  Mr.  Eads, 
or  the  company  organized  by  him,  1st,  a  right  of  way  across  the  Isthmus 
a  half  a  mile  in  width ;  2d,  an  exemption  of  the  property  and  capital 
stock  of  the  company  from  taxation  during  the  period  of  the  grant, 
namely,  99  years;  3d,  the  right  to  import  upon  the  Isthmus,  free  of 
duty,  any  and  all  materials  necessary  for  the  construction  and  operation 
of  the  railway  and  its  appurtenances ;  4th,  an  exemption  from  all  export 
duty  of  the  silver  and  bullion  used  by  the  company,  either  in  the  pay¬ 
ment  of  dividends  to  stockholders  or  debts  contracted  by  the  company 
abroad ;  and  5th,  she  has  given  to  the  company  a  subvention  of  a  mill¬ 
ion  acres  of  the  public  lands. 

In. the  opinion  of  your  committee,  it  would  be  a  great  mistake  for  the 
Government  of  the  United  States  to  fail  to  recognize  in  a  substantial 
way  the  overtures  thus  made  by  Mexico.  The  duty  of  our  Government 
in  the  premises  is  a  plain  one,  whether  viewed  from  a  selfish  or  an  un¬ 
selfish  standpoint.  If  viewed  in  the  former  light,  it  must  be  apparent 
to  any  one  at  all  familiar  with  the  enormous  commercial  interests  which 
will  be  affected  by  the  great  work  proposed  that  any  liberality  exercised 
by  our  Government  will  be  returned  a  hundred-fold  in  the  increased 
benefits  resulting  to  our  commerce.  Of  the  valuable  and  growing  com¬ 
merce  of  Mexico,  the  United  States  now  enjoys  but  5  per  cent. ;  95  per 
cent,  of  it  is  enjoyed  by  other  nations.  The  markets  of  Mexico  are  to¬ 
day  practically  closed  to  the  products  of  our  sod  and  industry,  while 
there  is  no  good  reason  why  they  should  not  be  open  to  both. 

The  combined  commerce  of  British  India,  Australia,  China,  Hong- 
Kong,  Peru,  New  Zealand,  Chili,  Japan,  the  Philippine  Islands,  Tas¬ 
mania,  and  the  Hawaiian  Islands  amounts  to  $1,425,953,000  annually. 
Of  this  vast  commerce  the  United  States  only  enjoys  4  per  cent.,  and  the 
Mississippi  Valley,  comprising  a  territory  equal  in  extent  to  six-tenths 
of  the  total  area  of  the  thirty-eight  States  of  the  Union,  is  wholly  de¬ 
barred  therefrom.  An  increase  of  our  trade,  nearly  doubling  it  in  this 
quarter,  would  more  than  compensate  the  United  States  for  the  guar¬ 
antee  asked  by  Mr.  Eads. 

Leaving  out  of  view#the  question  of  interest,  it  would  scarcely  be  con¬ 
sistent  with  the  dignity  and  magnanimity  of  as  great  a  country  as  ours 
to  reject  the  friendly  proffers  of  a  sister  republic  and  refuse  to  lend 


INTEROCEANIC  SHIP  RAILWAY. 


5 


any  assistance  to  a  great  work  like  that  proposed;  especially  so  in  view 
of  the  revived  fraternal  feeling  now  existing  there  towards  us. 

In  the  Mexican  concession  an  article  is  included  expressly  authorizing 
Mr.  Eads  to  accept  from  any  foreign  government  aid,  by  way  of  money 
or  guarantee,  to  enable  him  to  construct  the  railway,  with  power  upon 
his  part  to  give  to  such  government  any  security,  by  way  of  assignment 
or  intervention  in  the  revenues  of  the  road,  which  he  may  agree  to  do 
with  that  government.  Prompted  by  a  desire  that  the  United  States 
Government  shall  reap  the  benefits  flowing  from  the  construction  of  the 
railway,  Mr.  Eads  has  first  offered  it  the  opportunity  of  so  doing.  Here 
is  an  opportunity  for  the  assertion  by  our  Government,  in  a  most  prac¬ 
tical  and  sensible  way,  of  her  right  to  control  any  highway  across  the 
Isthmus,  and  if  she  is  willing  to  couple  her  assertion  of  this  right  with 
such  a  substantial  investment  as  will  look  to  the  successful  completion 
of  the  work,  her  action  will  merit,  and  receive,  the  respect  of  the  civil¬ 
ized  world.  If,  however,  she  refuses  her  aid,  and  yet  denies  the  right 
of  any  other  nation  to  assist  in  the  work,  such  a  course  would  neither 
meet  with  recognition  nor  approval  at  home  or  abroad.  The  wording  of 
the  concession  allowing  Mr.  Eads  to  accept  u  from  any  foreign  govern¬ 
ment”  is  significant,  and  should  cause  us  to  weigh  well  the  matter  before 
refusing  our  assistance.  Owing  to  the  magnitude  of  the  work,  and  the 
immense  amount  of  money  necessary  for  its  construction,  Mr.  Eads  has 
found  it  necessary  to  secure  Government  aid. 

He  does  not  ask  the  Government  of  the  United  States  to  advance  the 
money  necessary  to  construct  the  railway,  as  was  done  in  the  case  of 
the  great  Pacific  trunk  lines,  but  simply  asks  that  it  shall  guarantee 
the  payment  for  the  period  of  fifteen  years  of  dividends  of  G  tier  cent, 
per  annum  upon  the  par  value  of  $50,000,000  of  the  capital  stock  of  the 
company. 

He  estimates  that  the  total  cost  of  construction  will  be  $75,000,000, 
and  asks  a  stock  guarantee  to  the  extent  of  two  thirds  of  this  amount. 
He  does  not  claim  anything  by  way  of  gift  or  subsidy  from  the  United 
States.  On  the  contrary,  he  proposes  to  pay  back  to  the  Government 
every  dollar  which  it  may  be  called  upon  to  advance  under  its  guaran¬ 
tee.  The  loan  of  credit  is  based  upon  good  and  sufficient  consideration, 
which  is  as  lollows,  namely :  1st,  Mr.  Eads  proposes  to  carry,  during 
the  whole  period  of  the  grant,  Government  vessels,  mails,  and  officials, 
and  transmit  all  Government  telegrams,  free  of  charge;  2d,  he  gives  to 
the  United  States  the  right  to  regulate  the  tolls  of  the  company;  and, 
3d,  the  right  to  discriminate  in  favor  of  American  and  Mexican  com¬ 
merce.  In  no  sense  can  the  aid  solicited  be  deemed  a  subsidy — 1st, 
because  it  is  not  a  gift,  but  a  loan;  2d,  because  it  is  founded  upon  a 
good  and  sufficient  consideration;  and,  3d,  because  by  the  term  of  the 
bill  the  proposed  guarantee  is  made  conditional  upon  a  thorough  test  of 
the  practicability  of  the  project.  The  bill  provides  that  under  no  cir¬ 
cumstances  shall  the  Government  guarantee  have  any  force  or  effect 
until  ten  miles  of  the  railway,  with  its  terminal  works,  shall  have  been 
constructed  and  tested  by  a  transfer  over  the  same  of  a  loaded  vessel 
without  injury  to  the  road,  vessel,  or  the  terminal  works.  When  this 
test  has  been  successfully  applied  $5,000,000  of  the  guarantee  attaches, 
and  as  various  other  sections  of  the  road  are  completed  and  tested  by 
the  transfer  of  a  vessel  of  increased  weight,  proportional  amounts  of 
the  guarantees  respectively  attach  until  the  total  amount  of  $50,000,000 
is  reached. 

Your  committee  will  not  here  give  in  detail  the  provisions  of  the  bill 
which  they  have  agreed  upon  further  than  to  say  that  at  every  point 


INTEROCEANIC  SHIP  RAILWAY. 


6 

the  interests  of  the  Government  are  protected,  and  a  loss  of  public  money 
by  reason  of  the  investment  renders  it  impossible.  In  order  that  no 
question  might  be  raised  as  to  the  meaning  of  the  words  u  net  profits,” 
the  bill  fixes  the  same  at  50  per  cent,  of  the  gross  profits.  The  company 
is  precluded  from  mortgaging  its  property  or  hypothecating  its  revenues 
during  the  period  of  time  covered  by  the  guarantee,  and  most  ample 
provision  is  made  for  tbe  return  into  the  Treasury  of  the  United  States 
of  any  moneys  which  the  Government  may  be  called  upon  to  pay  by 
virtue  of  its  guarantee. 

The  bill  provides  that  its  stipulations  shall  not  take  effect  or  be  in 
force  for  any  purpose  whatever  until  all  the  powers,  rights,  and  immuni¬ 
ties  conferred  or  reserved  to  the  United  States  shall  have  been  duly 
recognized  and  consented  to  by  the  Government  of  Mexico. 

Wherefore  your  committee  report  the  accompanying  bill,  with  the 
recommendation  that  it  do  pass. 


A  BILL  to  incorporate  tlie  Interoceanic  Ship  Railway  Company,  and  for  other  purposes. 

Whereas  the  Government  of  Mexico  has  granted  unto  James  B.  Eads,  of  Saint  Louis, 
Mo.,  or  to  such  company  as  he  may  organize,  certain  powers,  rights,  and  privileges  in 
the  matter  of  the  construction  and  operation  of  a  ship  railway  across  the  Isthmus  of 
Tehuantepec,  with  au  accessory  railway,  lines  of  telegraph,  and  water  approaches, 
and  has  authorized  said  Eads  to  obtain  a  charter  for  said  company  either  in  Mexico 
or  elsewhere ;  and, 

Whereas,  among  other  rights  conferred,  said  Eads  or  said  company  are  author¬ 
ized  to  hypothecate  the  revenues  of  said  ship  railway  to  any  foreign  government  as 
security  for  any  money  advanced  or  guarantee  given  by  such  foreign  government  in 
aid  of  said  company  :  Now,  therefore, 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United  States  of  America  in 
Congress  assembled,  That  for  the  purpose  of  constructing  and  operating  sa'd  ship  rail¬ 
way  and  its  accessories,  hereinbefore  recited,  and  for  the  full  enjoyment  of  all  the 
rights,  privileges,  and  concessions  mentioned  and  contained  in  the  hereinbefore  cited 
grant,  and  such  others  as  maybe  hereafter  secured  from  the  Government  of  Mexico, 
said  James  B.  Eads,  with  such  others  as  may  be  associated  with  him,  and  their  suc¬ 
cessors  are  hereby  created  a  body  corporate  and  politic  in  deed  and  in  law  under  and 
by  the  name,  style,  and  title  of  “  The  Interoceanic  Ship  Railway  Company,”  and  by 
that  name  shall  have  perpetual  succession,  and  shall  be  able  to  sue  and  be  sued,  plead 
and  be  impleaded,  defend  and  be  defended  in  all  courts  of  law  and  equity  within  the 
United  States  of  America;  and  shall  generally  have  and  possess  all  the  rights,  privi- 
legs,  and  powers  usually  possessed  by  similar  companies,  and  may  do  all  lawful 
things  necessary  to  carry  into  effect  the  purposes  of  this  act  and  secure  the  full  en  joy¬ 
ment  of  the  powers,  privileges,  rights,  and  concessions  contained  in  the  grant  herein¬ 
before  recited  and  any  supplementary  grants;  and  said  company  is  hereby  authorized 
and  empowered  to  make  and  have  a  common  seal,  to  acquire,  hold,  transfer,  or  other¬ 
wise  dispose  of  property,  real  and  personal,  and  to  elect  such  officers,  employ  such 
agents  and  attorneys,  establish  such  office  or  offices  in  such  place  or  places,  issue  capi¬ 
tal  stock  in  such  amount,  which  shall  not,  however,  in  any  event  exceed  seventy-five 
millions  of  dollars,  dispose  of  such  stock  in  such  way,  open  and  keep  such  books  for 
stock  subscriptions  and  other  purposes,  and  impose  and  collect  such  tolls,  rates,  and 
charges  as  to  it,  said  company,  may  seem  necessary  and  proper:  Provided,  however, 
That  such  tolls,  rates,  and  charges  shall  at  all  times  be  subject  to  revision  and  control 
by  Congress,  as  hereinafter  provided ;  and  said  company  is  hereby  authorized  and 
empowered  to  make  such  by-laws,  rules,  and  regulations  as  it  may  deem  necessary 
and  proper  relating  to  the  management  of  the  affairs  of  the  company,  the  issue  and 
disposition  of  its  stocks,  the  acquisition  and  disposal  of  its  property,  estate,  and  effects, 
the  imposition  and  collection  of  its  tolls,  rates,  and  charges,  the  declaration  ot  divi¬ 
dends  on  its  capital  stock,  the  number  and  character  of  its  officers,  their  duties  and 
terms  of  office,  the  regulations  for  the  safety  and  control  of  vessels  in  transit  or  in  the 
docks,  harbors,  or  works  of  the  company ;  and  relating  to  all  other  matters  and  things 
not  inconsistent  with  this  act  and  connected  with  the  business  of  said  company  or  in¬ 
volved  in  carrying  out  the  purposes  for  which  said  company  is  created. 

Sec.  2.  That  the  Government  of  the  United  States  hereby  guarantees  that  the  stock¬ 
holders  of  said  company  shall  receive,  during  each  and  every  year  from  and  after  the 


INTEROCEANIC  SHIP  RAILWAY. 


7 


dates  and  times  hereinafter  specified,  and  until  fifteen  years  after  said  railway  is  com¬ 
pleted,  semi-annual  dividends  of  not  less  than  three  per  centum  upon  the  par  value 
of  the  stock  held  by  tin  m  ;  said  stock,  however,  not  to  exceed  in  the  aggregate  fifty 
million  dollars.  And  the  United  States  hereby  obligates  itself  to  pay  semi-annually 
to  said  company,  for  the  use  of,  and  for  distribution  among,  its  said  stockholders,  any 
sum  which  may  be  necessary  to  fully  make  up,  from  time  to  time,  said  semi-annual 
dividends  of  three  per  centum:  Provided,  however,  and  it  is  erpresshj  understood,  That 
no  part  of  this  guarantee  shall  take  effect  until  the  entire  practicability  of  the  said 
ship  railway  shall  be  demonstrated  by  the  safe  and  prompt  transportation  of  a  loaded 
vessel,  weighing,  with  her  load,  not  less  than  two  thousand  tons,  over  ten  miles  of  said 
railway,  at  a  speed  of  not  less  than  six  niiles  an  hour. 

Whenever  said  company  shall  have  completed  ten  miles  of  said  ship  railway,  and 
shall  have  constructed  the  necessary  terminal  works  to  transfer  vessels  from  the  water 
to  the  railway,  the  President  of  the  United  States  shall,  at  the  request  of  said  com¬ 
pany,  appoint  aboard  of  engineers  consisting  of  three  members — one  from  the  Navy, 
one  from  the  Army,  and  one  from  civil  life,  whose  duty  it  shall  be  to  proceed  at  once 
to  the  said  ship  railway,  and  if  said  company  shall,  in  the  presence  of  said  board, 
transport  a  loaded  vessel,  weighing,  with  her  load,  not  less  than  two  thousand  tons,  at 
an  average  speed  of  not  less  than  six  miles  per  hour  upon  the  said  ten  miles  of  its 
railway,  and  return  the  same  into  the  harbor  without  injury  to  the  vessel,  the  rail¬ 
way,  or  the  terminal  works,  such  facts  shall  be  immediately  reported  by  said  board 
to  the  Secretary  of  the  Navy  ;  and  at  the  date  of  the  transportation  of  such  vessel  as 
aforesaid,  the  guarantee  of  the  United  States  as  hereinbefore  provided  for,  to  the  ex¬ 
tent  of  five  million  dollars,  shall  thereupon  attach. 

When  another  ten  miles  of  said  railway,  with  the  necessary  terminal  works  afore¬ 
said,  shall  have  been  completed  at  the  other  end  of  the  railway,  a  board  of  three 
engineers  shall,  at  the  request  of  said  company,  be  detailed  in  like  manner  by  the 
President  of  the  United  States  to  witness  the  testing  of  the  same  ;  aud  if  a  vessel 
of  the  weight  specified  shall  in  like  manner  and  with  like  results  be  transported 
upon  the  same,  these  facts  shall  be  immediately  reported  by  said  board  to  the  Sec¬ 
retary  of  the  Navy  and  said  guarantee  shall  thereupon  attach  to  the  extent  of  five 
million  dollars  more.  Said  company  may,  should  it  deem  it  necessary,  construct  a 
canal  or  artificial  water-way  connecting  the  terminal  works  of  the  railway  with 
the  river  or  harbor  at  either  end  thereof.  The  portion  of  the  proposed  route  of  the 
railway  lying  between  the  two  ten-mile  sections  before  mentioned  and  the  line  of 
the  canal,  should  the  same  be  constructed,  shall  be  divided  by  said  company  into 
twenty  sections  or  subdivisions  of  equal  length,  one  of  which  may  be  composed  of 
both  railway  and  canal,  and  when  the  railway  or  canal  shall  be  constructed  upon 
any  of  these  sections,  the  President  of  the  United  States  shall,  at  the  request  of 
said  company,  at  once  send  a  board  of  engineers,  constituted  as  above,  to  witness 
the  testing  of  it,  which  shall  be  in  manner  following,-  namely:  Each  of  the  first 
five  intermediate  sections  completed  shall  be  tested  by  the  safe  transportation  over 
it  of  a  loaded  vessel,  weighing,  with  her  load,  not  less  tha^i  twenty  five  hundred 
tons,  at  an  average  speed  of  not  less  than  six  miles  per  hour.  Each  of  the  second 
five  intermediate  sections  shall  be  tested  by  the  transportation  over  it,  at  a  like 
speed,  of  a  loaded  vessel  weighing,  with  her  load,  not  less  that  three  thousand  tons. 
Each  of  the  third  five  intermediate  sections  shall  be  tested  by  the  transportation 
over  it,  at  a  like  speed,  of  a  loaded  vessel  weighing,  with  her  load,  not  less  than 
thirty-five  hundred  tons,  and  each  of  the  remaining  five  intermediate  sections  shall 
he  tested  by  the  transportation  over  it,  at  a  like  speed,  of  a  loaded  vessel  weighing, 
with  her  load,  not  less  than  four  thousand  tons:  Provided ,  however,  That  the  rate  of 
speed  herein  specified  shall  only  be  required  where  the  transportation  of  the  vessel  is 
upon  the  railway.  This  part  of  the  test  shall  have  no  application  to  any  section  or 
part  of  a  section  which  may  be  composed  of  canal.  As  each  section  of  the  railway 
is  tested  by  the  safe  transportation  of  a  vessel  upon  it  of  the  weight  and  at  the  rate 
of  speed  aforesaid,  and  as  each  section  of  the  canal  is  tested  by  the  safe  transpor¬ 
tation  of  such  vessel  through  the  same,  these  facts  shall  be  promptly  reported  by  the 
board  to  the  Secretary  of  the  Navy,  and  the  guarantee  of  the  United  States,  as 
hereinbefore  provided  for,  shall  at  once  attach  to  the  extent  of  two  millions  of  dol¬ 
lars  for  each  and  every  section  so  completed.  After  the  completion  of  the  first  ter¬ 
minal  section  of  ten  miles  of  the  railway  and  the  testing  thereof,  the  other  terminal 
section,  or  any  one  or  more  of  the  intermediate  sections  of  railway,  or  sections  of 
canal,  may  be  completed  and  tested,  and  the  corresponding  guarantee  for  each  shall 
attach  without  reference  to  the  order  of  time  in  which  they  may  be  severally  com¬ 
pleted.  In  all  cases  where  said  guarantee  shall  attach,  a  dividend  of  three  per  centum 
on  the  amount  of  the  stock  thus  guaranteed  shall  be  due  and  payable  by  the  Govern¬ 
ment  on  the  first  day  of  January  or  July  following  the  date  of  the  testing  of  the  sec¬ 
tion  of  railway  or  canal  as  aforesaid,  and  semi-annually  thereafter  until  the  Expira¬ 
tion  of  the  period  of  fifteen  years  from  and  after  the  completion  of  the  said  railway. 


8 


INTEROCEANIC  SHIP  RAILWAY. 


Said  railway  shall  he  deemed  completed  when  the  last  section  thereof  has  been  tested 
as  aforesaid. 

Sec.  3.  That  every  six  months,  namely  on  the  first  day  of  January  and  July  of  each 
year  following  the  dates  or  times  at  which  the  vessel  shall  be  transported  upon  the 
various  portions  of  the  railway  completed,  the  Secretary  of  the  Navy  shall,  upon  the 
demand  of  said  company,  draw  his  requisition  upon  the  Secretary  of  the  Treasury  of 
the  United  States  in  favor  of  said  company  for  a  sum  sufficient  to  pay  three  per  centum 
upon  the  par  value  of  the  stock  to  which  the  guarantee  of  the  Government  shall  then 
have  attached  ;  and  the  Secretary  of  the  Treasury  is  hereby  authorized  and  directed 
to  pay  to  said  company  the  sums  for  which  such  requisitions  are  drawn.  Whenever, 
after  "the  completion  of  said  railway,  a  semi-annual  dividend  shall  become  due  to  the 
stockholders  upon  the  fifty  millions  of  dollars  of  stock  guaranteed  by  the  Govern¬ 
ment,  it  shall  be  the  duty  of  said  company  to  exhibit  to  the  auditor  of  railroad  ac¬ 
counts  of  the  Interior  Department  of  the  United  States  a  full  and  correct  statement, 
dulv  certified  by  the  president  of  said  company,  and  verified  by  the  affidavit  of  the 
secretary,  which  said  statement  shall  clearly  show  the  gross  earnings  of  the  company 
during  the  six  months.  Fifty  per  cent,  of  said  gross  earnings  shall  be  taken  as,  and 
deemed  to  be,  the  net  earnings  of  the  company ;  and  if  such  net  earnings,  thus  ascer¬ 
tained,  shall  be  insufficient  to  enable  said  company  to  pay  to  its  stockholders  a  divi¬ 
dend  of  three  per  centum  for  the  six  months  upon  the  par  value  of  the  stock  held  by 
them,  not  to  exceed  fifty  million  dollars,  said  auditor  shall  thereupon  transmit  to  the 
Secretary  of  the  Navy  a  certificate  setting  forth  the  amount  of  money  necessary  to 
enable  said  company  to  pay  said  three  per  centum  to  its  stockholders  as  aforesaid ; 
and  upon  the  receipt  of  such  certificate  the  Secretary  of  the  Navy  is  hereby  author¬ 
ized  and  directed  to  draw  his  requisition  upon  the  Secretary  of  the  Treasury  of  the 
United  States  in  favor  of  said  company  for  the  sum  mentioned  in  said  certificate,  and 
the  Secretary  of  the  Treasury  is  hereby  authorized  and  directed  to  pay  to  said  com¬ 
pany  the  sum  for  which  said  requisition  is  drawn. 

Sec.  4.  That  the  Secretary  of  the  Treasury  of  the  United  States  is  hereby  directed 
to  issue  the  bonds  of  the  United  States  of  the  character  and  description  now,  or  which 
may  hereafter  be,  authorized  for  the  refunding  of  the  national  debt,  to  the  said  Inter- 
oceanic  Ship  Railway  Company,  in  payment  at  par  of  the  aforesaid  requisitions  of  the 
Secretary  of  the  Navy,  unless  the  Congress  of  the  United  States  shall  have  previously 
provided  for  the  payment  of  the  same  by  the  necessary  appropriation  of  money. 

Sec.  5.  That  as  often  as  the  Government  of  the  United  States  shall,  under  tiie  pro¬ 
visions  of  this  act,  advance  moneys  to  the  company  hereby  created,  it  shall  be  the 
duty  of  said  company  to  at  once  issue  its  bonds,  obligating  itself  thereby  to  pay  to 
the  Government  sums  equal  in  amount  to  those  advanced  by  the  Government  to  it ; 
which  said  sums  shall,  by  the  terms  of  said  bonds,  be  payable  in  ten  years  from  the 
date  thereof:  Provided,  however,  That  if  at  the  expiration  of  any  year  after  the  com¬ 
pletion  of  the  road  the  net  earnings  of  said  road  shall  exceed  a  sum  sufficient  to 
pay  yix  percent,  dividends  upon  the  capital  stock  of  said  company,  all  moneys  so  in 
excess  shall  at  once  be  paid  by  the  company ‘to  the  Secretary  of  the  Treasury  of  the 
United  States,  and  shall  be  by  him  applied  to  the  payment  of  the  bonds  oldest  in  date 
thereto  tore  issued  by  the  company  to  the  Government.  Any  bonds  thus  paid  shall  be 
canceled  and  returned  to  the  company.  All  bonds  issued  to  the  Government  by  said 
company  shall  be  delivered  to,  and" held  in  the  custody  of,  the  Secretary  of  the 

Treasury • 

Sec.  6.  In  consideration  of  the  guarantee  of  the  Government  herein  contained,  said 
company  shall,  when  so  required,  transport  upon  its  railway,  when  completed,  any 
and  all  Government  vessels,  troops,  mails,  and  officials,  and  transmit  upon  its  tele¬ 
graphline  all  Government  messages,  free  of  charge.  #  . 

Sec.  7.  In  further  consideration  of  said  guarantee,  the  Government  of  the  United 
States  shall  have  the  right  and  power,  through  its  Congress,  to  revise  and  control  the 
tolls  rates,  and  charges  imposed  by  said  compauy  for  the  transportation  of  vessels  upon 
its  railway.  If  such  tollsj  rates,  "and  charges  are  deemed  too  high,  they  may  be  re¬ 
duced  or  if  too  low,  increased :  Provided ,  however,  That  in  no  cases  hall  said  tolls  be 
so  reduced  as  to  prevent  said  company  from  paying  upon  the  par  value  of  its  total 
capital  stock  a  less  semi-annual  dividend  than  four  per  centum.  The  Government 
slmll  have  the  right,  in  fixing  the  rates  of  tolls,  to  discriminate  in  favor  of  vessels  be- 
longing  to  citizens  of  the  United  States  or  Mexico,  but  in  all  such  cases  the  commerce 
of  Mexico  shall  enjoy  ever}7  advantage  and  immunity  equally  with  that  of  the  Lnited 

Stilt 

Sec.  8.  That  said  company  may  mortgage  the  lauds  granted  to  it  by  the  Mexican 
Government,  and  its  auxiliary  railway  and  appurtenances,  and  the  revenues  thereof, 
but  it  shall  have  no  right  during  the  continuance  of  the  guarantee  aforesaid  to  mort- 
gao-e  the  ship  railway  or  any  part  of  the  work  or  appurtenances  necessary  for  the 
prompt  and  safe  transit  of  vessels  across  the  Isthmus,  nor  shall  it  have  the  right,  dur¬ 
ing  said  period,  to  alienate  or  hypothecate  the  revenues  derived  therefrom. 

Sec.  9.  That  said  company  shall  transport  upon  its  railway  no  vessels  of  war,  mu- 


INTEROCEANIC  SHIP  RAILWAY. 


9 


nitions,  troops,  or  contraband  of  war  of  any  nation  at  war  with  the  United  States  or 
Mexico. 

Sec.  10.  Nothing  herein  contained  shall  be  so  construed  as  to,  in  any  way,  conflict 
with  the  provisions  of  the  concession  granted  by  the  Mexican  Government  to  James 
B.  Eads,  and  heretofore  referred  to ;  and  it  is  hereby  expressly  declared  that  the  Gov¬ 
ernment  of  the  United  States  shall  not,  by  reason  of  its  guarantee  aforesaid,  secure 
any  right  which  will  violate  the  letter  or  spirit  of  said  concession. 

Sec.  11.  That  nothing  in  this  act  shall  be  construed  to  trammel  the  said  Eads  in 
the  design,  location,  and  construction  of  said  railway  and  its  accessory  works. 

Sec.  1*2.  That  the  stockholders  of  the  corporation  hereby  created  shall  not  be  in¬ 
dividually  liable  for  the  debts  of  the  corporation  except  to  the  extent  of  the  unpaid 
purchase-money  which  may  be  due  upon  the  capital  stock  subscribed  for  by  them  re¬ 
spectively. 

Sec.  13.  That  said  corporation  shall  exist  and  continue  during  the  period  of  ninety- 
nine  years  from  the  date  of  the  passage  of  this  act. 

Sec.  14.  That  all  acts  or  parts  of  acts  inconsistent  with  the  provisions  of  this  act 
be,  and  the  same  are  hereby,  repealed  so  far  as  they  affect  the  corporation  hereby 
created :  Provided,  That  this  act  shall  not  take  effect,  or  be  in  force  for  any  purpose 
whatever,  until  all  the  powers,  rights,  and  immunities  conferred  or  herein  reserved  to 
the  United  States  shall  have  been  duly  recognized  and  consented  to  by  the  Government 
of  Mexico. 

H.  Rep.  322 - 2 


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